Real Estate 101: Earnest Money
When you go to buy a new home, you're going to need a lot of resources, but let's be honest, a dictionary shouldn't be one! My job as a real estate agent is to make sure my clients are well prepared and educated for what's going to happen during their transaction.
Today, let's talk about earnest money!
This money can be two things:
#1: A sign of good faith from the buyer
#2: A safety net for both the buyer and seller
Initially, earnest money is used as sign of good faith from the buyer to show that they are going to work hard and do what needs to be done in order for the sale to go through. If for some reason, the buyer falls through and exits the contract without a good reason, the seller can keep the earnest money because the buyer bailed without justification.
The earnest money can also be used as a safety net for the buyer. The money is their deposit that allows them the time to figure out all the details of the transaction and the seller will not continue to market the home to other buyers.
Now take a moment to imagine a scenario where an inspection has been done on the home and some major repairs are needed to made. If the buyer and seller fail to come to an agreement on how to handle such repairs by a specified deadline, the buyer can then exit the contract legally and get the earnest money returned to them, in full, and with no penalties.
Earnest money is really a great way for both buyers and sellers to feel confident that the other party is doing everything in their power to help the sale go through. And it also allows for some relaxation in knowing that you may have some recourse if something goes wrong.
Stay tuned for more real estate 101 tips and if you have any questions about the process of real estate transaction, please reach out!
We are here to help!
Julia Bandel Shawn Bandel